The Smith Barney brokers are ecstatic about the return of Sallie Krawcheck, according to Elizabeth Wine in On Wall Street Magazine.
"If I'm a Smith Barney broker, I'm happy," says Chip Roame, managing principal with financial services research and consulting firm Tiburon Strategic Advisors.
Roame believes that Krawcheck's return to the brokerage business, which she ran before moving to the CFO office in 2004, will benefit advisors because she is clearly on the Chuck Prince team--a reference to Citigroup's current CEO. "By putting her back in that spot, it probably draws Smith Barney closer into the fold of Citi, gets it more resources, ramps up focus on integrating brokerage with banking services."
Indeed, when the announcement of Krawcheck's return to the brokerage side was announced, Smith Barney brokers were reported to have literally broken out into applause.
Krawcheck's move to Citi's brokerage business brings her full circle. She was brought on board by then-Citigroup head honcho Sandy Weill, who hired her away from her post as the chief executive of Sanford Bernstein, to clean up the business and restore credibility after scandal rocked Citi following revelations (largely from the reporting of Charlie Gasparino, then at the Wall Street Journal) that analyst Jack Grubman had tainted his research in order to win favor with Citigroup clients and the banks top executives.
In 2004, Krawcheck essentially switched jobs with then-chief financial officer Todd Thomson, a move that was seen as an attempt to give both Krawcheck and Thomson broader experience within Citigroup. Both were seen as potential successors to Citigroup chief executive Chuck Prince.
In recent months, rumors had spread (thanks, in part, to the reporting of that Gasparino fellow again) that Krawcheck was unhappy in her position as CFO, fueling speculation that she might leave the bank all together. There was talk that she was offered a position in the administration of newly-minted New York governor Eliot Spitzer but had rejected the job.
Thomson's sudden departure from the bank, under a cloud of rumors about lavish spending and travel and a perhaps inappropriate relationship with CNBC star Maria Bartiromo, seems to have cleared the way for Krawcheck to return to Citigroup's Smith Barney brokerage business. Thomson is reportedly not a very popular guy around the brokerage business these days.
Pete Michaels, a Boston-based securities attorney at law firm Michaels & Ward who used to work at Citigroup, says Krawcheck would likely put an end to the flurry of gossip surrounding the firm. "She will make sure the firm is not distracted by the kind of thing we've read about [recently]. I think she's going to be the broker's advocate. Under the last guy, there were a lot of distractions going on that won't be the case under Sallie Krawcheck."
Michaels reports that many of his broker friends at the company have complained bitterly about having to explain to clients why the Money Honey [Bartiromo's nickname] was flying around on the corporate jet. He adds that clients can be fickle people. "Some are going to think the broker knew what was going on. Clients don't like to hear things [that are] negative in any degree about where their broker works."
As the New York Times likes to put it: "Oh snap!" When your former employees refer to you as "the last guy" you know you probably aren't missed very much.
The Return of the Native [On Wall Street]